Steps To Settle Credit Card Debt Through Negotiation

Credit debt settlement involves settling your credit card debts for less than the full amount you owe. More and more creditors are willing to agree to some sort of debt settlement program. Creditors will agree to these programs, wherein they accept a smaller payment as payment in full, because otherwise they fear they may not get paid. Credit card debt can be wiped away in a bankruptcy, as it is unsecured debt, and if you default, it can be difficult for them to collect. Getting money through a settlement agreement is better for the creditors than getting nothing at all.

Step By Step Guide to Credit Debt Settlement

• The first step to credit debt settlement is to consult with a professional. While you can try to do the settlement yourself, it is usually a poor idea and you may not be able to negotiate the best possible deal. Work with a debt settlement attorney or a reliable and honest not-for-profit credit counselor who can help you and guide you through the process.
• The next step is to fall behind on your payments. This may seem counter intuitive, because after all, you don't want to just stop paying your debt- this is why you are trying to settle. However, as long as a credit card company is getting their monthly payments, they have no incentive to work with you to settle your debt for less. In fact, they would be quite happy if you continued to send them the minimums every month for years and years, as they collect interest and make money off of you this whole time.
• Once you are about three to six months behind on payments, send a debt settlement letter. Propose a payment plan or solution to settle the debt. This can involve making an offer to make a one time lump sum payment for less than what you owe. Doing this is often best if you can come up with the cash as it is more attractive to a creditor who then knows he will get that money for sure. If you can't come up with the cash, propose a payment plan.
• Negotiate with the creditors until you come to a deal you can both live with. Get the deal in writing before you send any payment
• Send payment once you have the deal in writing. The credit card company will likely close your card at this point.

Getting Help

Working with an experienced debt settlement attorney can help make the process of credit debt settlement simpler and your attorney may even be able to help you save more money by settling for less.